Is Memory Care Mandatory? Providers Build and Expand to Keep Up With Demand

According to the Alzheimer’s Association, one in eight people over the age of 65 has some form of Alzheimer’s. Further, nearly half of seniors age 85 and older have it. Compounding this trend is the fact that by 2030, the population of seniors is expected to double, reaching nearly 74 million.1 This is a message to senior living providers that existing residents who are not necessarily considered to have cognitive impairment may very well need some level of memory care (MC) programing and related assistance. As such, is MC becoming a necessary component of all seniors housing and care facilities? A look at current development trends coupled with rapidly changing demographics suggests the answer is yes.

A recent survey of nearly 300 leaders at seniors housing and care facilities found that a majority of respondents (61%) believed that Alzheimer’s/MC would experience the most growth in 2016 as compared to the rest of the acuity spectrum. Further, when asked which elements of the continuum of care they have construction projects planned for, the top two answers were AL and Alzheimer’s/MC at 41% and 40% respectively. Clearly, MC is a big part of senior living’s present and future. Providers can ill afford to neglect incorporating MC capabilities into their facilities. In this article, we discuss the ever increasing need for MC services in all seniors housing and care facilities, examine the opportunities and challenges MC providers face and profile a successful cottage-style model in Arizona.

The Effects of Aging at Home

The population of seniors age 82 to 86 is expected to more than double within the next 15 years creating strong demand for quality senior care options (Figure 1). As medical advances and technology continue to develop, seniors will likely be able to stay in their own homes for longer. What effect does this have on care providers? Seniors are choosing senior living facilities as a last resort once they can no longer remain at home, thus the acuity level of seniors entering these facilities has increased significantly from where it has been historically.

With new advances in technology and medicine, seniors have the ability to be cared for at home, or take care of themselves, for longer than in the past. Therefore by the time potential residents think about moving into senior living facilities it is often because they don’t have another option. In many cases, this is due to MC related issues such as wandering, loss of mental cognition, etc.

The Industry Responds

The growth of AL and MC can be attributed to operators and investors recognizing the need to enhance existing facilities by expanding their product line to include MC units. This will increase their ability to retain residents and allow them to stay at the facility should they need MC care. It is becoming more and more important for IL and AL facilities to add specialty MC wings in order to complete their continuum of care.

According to NIC MAP data, the senior housing occupancy rate as of 2016 remained the same as 2015 at 89.7%. This is expected to stabilize in 2017 at 90%. With respect to inventory and absorption, current 2016 growth rates declined slightly but are expected to increase in 2017. For 2017, NIC forecasts an increase in construction in concentrated markets. Much of the product that will be coming online in the foreseeable future caters to seniors with higher acuity levels, such as assisted living (AL) and MC (Figure 2). Clearly the percentage of seniors housing and care growth that is MC has grown significantly since 2011.

Not only have MC expansion trends grown, but the new construction of standalone MC facilities has been increasing as well. According to NIC, there were 29,090 MC units at freestanding facilities as of 2Q16. The average construction activity represents nearly 11% of existing inventory, a dip from late 2015 but still well above levels in 2009 (Figure 3).

While it is important for developers to continue to build and expand the number of MC beds available, it is also crucial to not lose site of the care aspect associated with this development. With higher acuity residents comes increased oversight and ultimately increased labor costs. The training and development of staff is a critical component to success in the MC segment.

A Shining Example

The environment of a MC facility is of the utmost importance. One example of a successful MC facility is Sunshine Village Memory Care Community in Phoenix, Arizona. Sunshine Village is a cottage style MC residence that offers a family style setting in order to provide comfort to individuals with memory loss. The cottages allow seniors to maintain their independence and enjoy their day-to-day routines while still feeling secure that they are supported by a knowledgeable, caregiving team 24 hours a day. Sunshine Village is comprised of seven single-story buildings that are each equipped with dining rooms and common areas. The small house concept is designed to help promote socialization and create a homelike environment, thought to be especially beneficial to those suffering dementia.

Looking forward, while much of the attention on MC new construction and expansion is focused on major markets and retirement havens such as Phoenix, it is important to recognize that the demand for MC extends beyond metropolitan areas. The need to build MC units with quality care in secondary and rural markets is also vital. In many rural markets where there are no MC options, seniors with cognitive impairments are forced into psychiatric facilities or secured nursing home wards that have little-to-no MC programs that enhance an individual’s life and well-being.

Simply put, the market for quality affordable MC is strong and growing. Continuing the recent good work by those in the industry to increase MC services across the continuum of care is essential.

About The Authors

Jessica Rosenberg

Jessica Rosenberg

Jessica Rosenberg is an assistant vice president with Lancaster Pollard in Columbus. Previously, she worked in corporate development and completed a management training program at Belmont Village Senior Living. She earned her degree in hotel administration management from Cornell University. At Lancaster Pollard, she is responsible for financial modeling and valuation, credit analysis, interaction with all funding participants and coordinating the closing process.


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